Contribution made in error 2020. (100% excess)
Rounding off numbers for simplicity.
Contributed $7000 on May 13, 2020 for tax year 2020. Withdrew $7000 plus earnings of $3000 = $10000 on April 20, 2021. $3000 taxable. [tax day extended to May 17 for 2021]
While entering answers to TT questions, showed I would owe EXTRA TAX BILL of $300 (10%). Is this a penalty? I thought I was withdrawing in time to avoid a penalty. At completion-I owe $300 + $700 federal + $125 state = $1125 tax on $3000. A 38% tax! Brutal! Does this sound correct? Age over 60, Roth held for 2 years.
